In today’s briefing:
- China TCM (570.HK) Privatization Update – The Long Stop Date to Extend or Not?
- TCM (570 HK): “Uncertain” To Spook Shares
- Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference
- S&P/NZX 50 Index Rebalance: Tower (TWR) Replaces Arvida (ARV)
- China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price
- K-Bank’s IPO Cancellation: What Led to This Move and Plan for a Comeback
- Korea Zinc’s 2.4% Treasury Shares – Devil Is In the Legal Loophole
- Thematic Report : Investment Opportunities in Indian Markets Led by Promoter Buying
- Charter Hall Bumps With Final HPI Bid
- Need a Game Plan to Tackle Korea Zinc’s Buyback Tender with a 20% Proration Risk
China TCM (570.HK) Privatization Update – The Long Stop Date to Extend or Not?
- Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance.
- Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was “inappropriate”.
- If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.
TCM (570 HK): “Uncertain” To Spook Shares
- China Traditional Chinese Medicine (570 HK) (TCM) will fall today. Perhaps a lot.
- With two days left on the clock to secure the pre-conditions (18th October), the Offeror said “it remains uncertain” whether it can secure an extension from the investor group.
- Such wording could be viewed as boilerplate SFC legalise. I would argue the use of “uncertain” is superfluous, unhelpful, and for investors, downright worrying.
Couche-Tard Execs in Tokyo, “Hoping” For Meetings But Really There To Hold a Press Conference
- Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP).
- There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government.
- None of that will win the hearts and minds of the Special Committee.
S&P/NZX 50 Index Rebalance: Tower (TWR) Replaces Arvida (ARV)
- Arvida (ARV NZ) will be deleted from the S&P/NZX 50 Index following its acquisition by Stonepeak Alps BidCo. Tower Ltd (TWR NZ) will be added to the index.
- Passive NZX50 Index trackers will need to buy nearly 18m shares of Tower Ltd (TWR NZ) – that is over 26 days of ADV.
- There has been a lot of positioning in Tower Ltd (TWR NZ) since Stonepeak’s offer for Arvida (ARV NZ). There should be enough supply for the passive trackers.
China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price
- Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
- This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked.
- Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.
K-Bank’s IPO Cancellation: What Led to This Move and Plan for a Comeback
- The institutional demand forecasts were much worse than expected, leading to the company’s blunt admission in the latest filing that the book-building flopped, prompting them to cancel the IPO.
- Bankers NH and KB suggested an offering price below 8,500 KRW, but pre-IPO backers like Bain Capital and MBK strongly opposed, unhappy with shrinking proceeds, pushing for cancellation.
- K-Bank plans to regroup and adjust the heavy 50% secondary share portion to retry the IPO in six months before their prelim review window expires.
Korea Zinc’s 2.4% Treasury Shares – Devil Is In the Legal Loophole
- Devil is in the legal loophole. Issuing treasury shares to employees as bonuses is an exception that is not bound by the condition of ‘6 months after treasury shares acquisition.
- It would be nearly impossible for Korea Zinc to sell 2.4% of its treasury stock to an external friendly force and transform it into a friendly stake by February 2025.
- Although MBK/Young Poong Alliance has the advantage right now in this M&A battle for Korea Zinc, it is by no means over.
Thematic Report : Investment Opportunities in Indian Markets Led by Promoter Buying
- In the overheated Indian markets where selling spree by promoters is going at record pace.
- We identified certain interesting companies where promoters are buying giving confidence in their business
- We further delve into the thesis and key triggers for these companies
Charter Hall Bumps With Final HPI Bid
- Back on the 9th September, pub play Hotel Property Investments (HPI AU) announced – and summarily rejected – a A$3.65/share cash Offer from Charter Hall Retail Reit (CQR AU).
- Charter Hall has now increased terms to A$3.85/share (best & final), a 17.7% premium to undisturbed. The Offer remains conditional on an 50.1% minimum acceptance condition. Charter Hall holds 14.7%.
- HPI’s reported response? “While Charter Hall’s improved offer provides an attractive exit for shareholders, we remain committed to evaluating all options that deliver the best long-term value.“
Need a Game Plan to Tackle Korea Zinc’s Buyback Tender with a 20% Proration Risk
- NPS is now viewing their voting rights on Korea Zinc purely from a returns angle, shifting from earlier expectations of siding with Choi due to political pressure.
- We need a tendering strategy for a 20% proration risk, focusing on when MBK will buy that extra 3.7% stake to cut losses on untendered shares.
- MBK will aim to buy leftover shares cheaply. Their approach depends on the progress of Choi and Trafigura’s talks
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